Labor: Try mediation for unpaid intern lawsuits

It’s summer vacation for college students. That used to be their time to go to the beach, see friends and make a few bucks. Not anymore. The beach and friends part may still be happening, but the availability of summer jobs is not what it used to be. At least jobs that pay. Instead, college students and even graduates are pursuing the new-normal job: an internship that pays in experience, possible connections and resume building, but not in dollars.

Employers beware. Interns are beginning to demand compensation for performing the same work as paid employees, many of whom they displace for free. Many have filed lawsuits. And they are winning. Two interns who worked on Fox Searchlight’s film “Black Swan” claimed the company’s unpaid internship program violated federal minimum wage and overtime laws. They brought a class action lawsuit against Fox Entertainment Group. In June, a federal judge in New York ruled that Fox should have paid the interns because they essentially were regular employees. The judge also allowed the case to proceed as a class. Other intern lawsuits are now pending around the country against Warner Music Group, Hearst Magazines, Conde Nast, Elite Model Management and others.

These lawsuits pose significant risks and costs not only for the employers, who face potentially enormous liability, but also for the interns. How many 20-somethings want to mark themselves as trouble-makers just as they seek to enter the job market? Likewise, companies concerned about their reputation surely do not want to be seen as taking advantage of talented individuals with little or no bargaining power. These disputes lend themselves perfectly to an alternative approach—mediation, and in particular, pre-filing litigation.

Mediation offers many advantages. First, it is confidential. Mediation sessions are conducted in private, behind closed doors. No one besides the participants needs to even know that mediation is occurring. Further, all communications in mediation are statutorily privileged in most jurisdictions in the U.S.

Experienced mediators make a difference. They understand each side’s needs and interests and suggest creative ways to satisfy them. The parties can select a mediator with experience in their industry.

Mediation is flexible. The times and location for mediation sessions can accommodate the parties’ schedules. Additional sessions can be scheduled easily.

Importantly, unlike litigation, mediation is not a winner-take-all process. Settlements are typically crafted that do more than compromise each side’s position. Rather, mediated settlements serve the parties’ long-term interests. Business relationships can be preserved.

Finally, mediation allows individuals and companies to avoid devastating results. This benefit should be especially important to interns and the companies that retain them. Defendant companies face potentially enormous financial liability from an adverse court judgment in an intern class action lawsuit. Plaintiff interns are saved from giving themselves a damaging black mark that could block their path to gainful employment.

Ultimate resolution of intern-employer conflicts likely will not occur without a legislative solution. In the meantime, interns and the companies that hire them would be wise to turn to mediation before going to court.